Shaun Rademeyer, CEO of bond originator BetterBond, says townhouse living is the perfect gateway for young home-owners “to get a foothold” into affluent suburbs that they wouldn’t necessarily be able to afford if it was a free-standing home.
However, there are a few additional costs that are associated with being a sectional-title property owner and certain restrictions that are imposed on you that don’t apply to freehold homes that you need to be aware of before you take the plunge.
The first thing to remember is that by purchasing a townhouse, you are effectively buying into a community housing scheme, which means that as a collective, all homeowners in the complex will have to take responsibility for amenities and common areas.
“You will not only own your home in the complex, but will also share ownership of all the ‘common’ areas, such as hallways, lifts, gardens and recreational facilities, and share the financial responsibility for the upkeep and maintenance of these areas,” says Rademeyer.
Every townhouse complex will require home-owners to pay a monthly levy over and above bond repayments, so it’s important to factor this into your affordability calculations before you apply for a home loan. Also, bear in mind that banks will likely reject your bond application if they don’t feel that you can comfortably afford both payments.
Rademeyer advises that you ask as many questions as possible about the levy and what it covers.
“Make sure you ask about your share of the municipal rates for common property, the monthly premium for the bricks-and-mortar insurance that covers the whole property (including your unit), the security costs, how much it costs to maintain the grounds and building exteriors and the compulsory reserve fund for the complex.
The second thing to consider is the owner-tenant occupied split.
It’s ideal to look for a complex that has a high percentage of owner-occupied homes, because home-owners are invested in ensuring that high-maintenance standards are upheld at all times.
“Owners tend to demand a higher standard of maintenance – and are less likely to default on their levies – if they live in a complex themselves. This means that the complex will be well kept and that the value of your investment will be better protected. In addition, you are less likely to have to deal with noise, pet and parking problems,” he says.
Because townhouse living means following prescribed rules and regulations set by the complex’s body corporate, certain freedoms like owning a pet, renovations and major structural changes to your home could be restricted.
“As to the size of the complex, you need to be realistic about how involved you want to be in running it,” Rademeyer says.
“A bigger complex might seem impersonal, but there should be more candidates to be elected as trustees, and more money to pay a professional managing agent, while a smaller complex will probably require more direct involvement on the part of the owners.”
If you are thinking about buying a townhouse as a rental investment, then a one-bedroom unit will deliver the best return for investment, but if you’re buying it as your primary residence, you’re better off buying a two-bedroom townhouse, because these tend to resell easier.